More builders are being hired by banks and lenders to complete their real estate owned (REO) properties and get them ready to sell. This new market is a welcome source of business for builders who have managed to stay afloat over the last several years, but are struggling to find business.
Most banks are unaware of the need to provide a third-party express limited warranty to their buyers on foreclosed homes. By living in the implied warranty world, they open themselves up to potential warranty lawsuits. Although a buyer may have signed an “as is” purchase contract, a warranty issue can result in a challenge once that buyer becomes a homeowner. The buyer may include the builder in that lawsuit.
BBWG has a lender warranty liability and service transfer that can benefit the builder finishing the home, as well as protect that lender. Today, builders and lenders recognize the importance of transferring as much liability as possible to a third-party.
Other warranty products being touted to banks and lenders may provide that third-party express warranty, but simultaneously puts that lender into the unwanted position of becoming warrantor for workmanship, materials and systems for at least one year. If the home is HUD financed, the lender is on the hook for two years. The builder may find him/herself on the hook as well.
The Bonded Builders warranty plan takes away the lender’s warranty service responsibilities while still providing that express warranty necessary in today’s litigious climate. It helps protect the builder as well.
A lender who provides an express warranty will enjoy a selling tool — one that may be the determining factor when a buyer is looking at foreclosures and short sales. If the lender can sell more homes, then more completion work will be available for builders. It’s a win-win for all concerned.
One of the smartest things a builder who is completing foreclosures can do is to tell that lender about a warranty plan that can protect them both. That’s a real service to that lender.
For more information about this warranty liability/service protection plan, builders and lenders can contact Sheila Morgan, National Accounts Director for BBWG, (800) 749-0381, Ext. 3601, or firstname.lastname@example.org.Share